Calif. drought challenges state's businesses

California is entering its fourth year of drought, leading to unprecedented restrictions on water usage for the state’s 38 million residents.
USA TODAY

Juan Martinez, of the Onelawn landscaping company, installs a section of artificial lawn at a home in Burlingame, Calif. on April 3. As California enters its fourth year of severe drought, artificial lawns are gaining popularity among households who are facing a mandatory 25% reduction in water use announced by California Gov. Jerry Brown.(Photo: Justin Sullivan, Getty Images)

SAN FRANCISCO — California's punishing drought — which led to the first mandatory statewide water restrictions in state history last week — will bring more pain to some businesses and prosperity to others if it doesn't let up soon.

Now in its fourth year, the drought has already left a swath of losers — from farmers and ski areas to golf courses and wildlife — but also a few winners, as businesses and innovators find ways to adapt to what might be the future climate of California.

"We're on a real collision course with a very dark reality," says Dave Puglia, senior vice president of the Western Growers Association in Irvine, Calif., a grower and packer trade group.

WHO GETS HURT ...

The mix of crops that's traditionally grown is changing. Farmers are plowing up fields where they used to grow vegetables like broccoli, carrots and tomatoes to put in nut and fruit trees, which demand less water.

"Cotton has gone from 1.5 million acres to almost nothing. We're cutting way back on rice. The number of dairy cows is probably going to fall by 100,000 or so," said Dan Sumner, a professor of agricultural economics at the University of California-Davis.

The toll on the state's agriculture industry will get heavier and U.S. consumers outside California may feel it, too, when they notice some supermarket favorites seem less plentiful. About half of the fresh produce consumed in the U.S. and one-third of the nation's organic produce is grown in the state's fertile Central Valley.

Retail price spikes are unlikely because of the drought, however. Only a small portion of what shoppers pay is based on what farmers get for their crops — shipping, handling, packaging and marketing expenses are collectively bigger. Plus, food prices are often set on a global scale of supply and demand, so in a vast world marketplace, California's drought may not be a big factor, Sumner says.

CLOSE

Want to blame something for California's drought? According to research, one particular type of seed is partially to blame, accounting for up to one tenth of the state's total water consumption per year.

Already, 17,000 jobs have been lost in the Central Valley, says Steve Lyle of the California Department of Food and Agriculture. California employed 348,900 people in agriculture in 2013.

About 1 million acres are now idle due to the drought, according to the University of California-Davis.

"The major part of one of America's most productive farming regions could run out of all water and be unable to farm in the next number of years," says Puglia, the Western Growers Association executive. "That's what the future looks like, which is why people are so scared."

Researchers are still calculating this year's potential impact. The economic hit to the state in 2015 could be $3 billion, compared with $2 billion last year, says Richard Howitt, an agriculture and resource economics expert at the University of California-Davis.

He estimates that another 20,000 jobs could be lost, including in agriculture and food production.

Wildlife will be squeezed too — not too mention the lucrative tourist dollars it pulls from sportsmen, hikers and other outdoor enthusiasts. Snowmelt runoff plays an important role for fish and other aquatic species since it's the primary source of summertime flow for many of the West's rivers and streams, according to Leon Szeptycki, executive director of Stanford University's Water in the West program.

That will affect both endangered species such as the Delta smelt and also recreational fish such as salmon and steelhead

"The lack of snowpack will mean acutely low flows for these streams, and many of them will run dry," he said. "The impacts on aquatic life and ecosystems is potentially staggering."

... AND WHO BENEFITS

Businesses ready to help consumers and businesses change their behavior — and save them money in lower water bills — should do well in California's browner landscape.

With strict water use rules coming, anyone who wants a yard that doesn't look like a dust bowl needs to redesign and replant. Lawns are out, rocks and water-sipping ground covers like sage, yarrow and iceplant are in.

"People are coming out of the woodwork" to get water-efficient gardens now, says Eva Knoppel, who owns Garden of Eva Landscape Design in Los Angeles.

She specializes in xeriscape garden design. Xeros means "dry" in Greek and xeriscaped gardens are designed to require very little water, using drought-tolerant plants.

Knoppel installs rainwater collection systems as well as crafting gray-water systems that reuse bath, shower and washing machine water to irrigate gardens.

"Three years ago, I got maybe one call a week from people who wanted to transform their gardens. Now I'm getting two or three calls day," says Knoppel.

Nurseries are stocking more hardy dry-weather plants native to California and the Mediterranean region.

Succulents like agave, aloe and hen & chickens are popular as are perennial grasses like sedge and blue oat. Manzanita and ceanothus, sometimes called California lilac, are both increasingly must-have plants for modern yards because, once established, they need little water.

Appliance sales haven't changed drastically so far because water-efficient clothes and dishwashers have been widely used for "years now," reports Bob Harrison with Aztec Appliance in San Diego.

Even so, he says, he hears more people mention water efficiency in his showroom.

"In laundry equipment in particular, that's where we hear it," says Harrison, who's been selling appliances for 30 years. "San Diego literally is a desert that's parked next to the ocean. We've got to think about it."

EYES ON THE FUTURE

This being California, the drought could spur innovation.

Wilshire Country Club in Los Angeles has effectively remade the roughs on its golf course into desert by converting them into dry patches, which use less water.